Buy 2,275 Shares in This Top Dividend Stock for $333 Per Month in Passive Income

There are two ways to make this amount of cash from this dividend stock: investing now or reinvesting for later. Which works for you?

| More on:
A close up image of Canadian $20 Dollar bills

Image source: Getty Images

If you’re looking for passive income to come in each month, that’s great! However, there is a lot more to consider than just some cash flow when picking a stock. Investors should find a dividend stock that has a lot more room to grow. That is why today, I’m going to recommend investors take a look at Northland Power (TSX:NPI).

Why Northland?

Northland stock is a solid choice if you’re looking for growth in the next few decades. The company holds renewable energy assets in various locations around the world, creating a diverse range of options for investors to look at.

One of the most exciting is offshore wind farming, which doesn’t take up arable land and produces higher wind speeds. Therefore, it creates more power than those wind farms located on land.

Furthermore, Northland stock is one of the few renewable energy companies that’s been around for decades. So, rather than choosing some up and coming dividend stock in this field, you can look back on solid growth.

In fact, over the last decade along, Northland stock is up 85% as of writing. That’s a compound annual growth rate (CAGR) of 6.14%! That’s solid growth from a solid stock.

How much in dividends are we talking?

Now that you know this is a solid stock from the past, what about the dividends? Northland stock currently holds a dividend yield 3.5% as of writing. In the last decade, that dividend has grown by a CAGR of just 1.06%. However, that’s because it’s been using available cash to expand, so I’m quite happy with that.

Plus, it’s in value territory with the dividend stock currently trading at just 9.97 times earnings as of writing. Now, if you’re going to bring in significant passive income from this dividend stock, there are two ways about it: investing now and drip feeding. Let’s look at the former first.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDEND (ANNUAL)TOTAL PAYOUT (ANNUAL)FREQUENCYTOTAL PORTFOLIO
NPI$34.503,330$1.20$3,996Monthly$114,885

As you can see, reaching that amount is possible. But it’s a huge investment. So, instead, let’s look at what would happen if we drip feed into this stock over a decade.

YearShares OwnedAnnual Dividend Per ShareAnnual DividendAfter DRIP ValueYear End Shares OwnedYear End Stock PriceNew Balance
12275.00C$1.20C$2,730.00C$81,262.852350.79C$36.62C$86,081.99
22350.79C$1.21C$2,852.28C$88,977.982425.30C$38.87C$94,263.42
32425.30C$1.23C$2,973.88C$97,280.672498.44C$41.25C$103,068.45
42498.44C$1.24C$3,096.03C$106,207.462570.13C$43.79C$112,535.86
52570.13C$1.25C$3,218.63C$115,797.022640.30C$46.47C$122,706.73
62640.30C$1.27C$3,341.56C$126,090.312708.90C$49.33C$133,624.50
72708.90C$1.28C$3,464.71C$137,130.682775.86C$52.36C$145,335.22
82775.86C$1.29C$3,587.99C$148,964.092841.17C$55.57C$157,887.68
92841.17C$1.31C$3,711.33C$161,639.252904.77C$58.98C$171,333.55
102904.77C$1.32C$3,834.63C$175,207.772966.65C$62.61C$185,727.65

As you can see, if you bought 2,275 shares of this dividend stock, down the road, you would bring in the $3,996 needed to create $333 per month in passive income. What’s more, it would cost just $78,487.50 instead of $114,885. That’s still a lot, but you also end up with a portfolio worth $185,727.65 at the end of it!

So, it’s up to you and your budget, but this is still a solid dividend stock I would choose for further investment in the next decade and beyond.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Dividend Stocks

young woman celebrating a victory while working with mobile phone in the office
Dividend Stocks

3 CRA Benefits Most Canadians Can Grab in 2024

You can save on taxes by claiming the dividend tax credit on Fortis Inc (TSX:FTS) shares.

Read more »

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

edit Woman in skates works on laptop
Dividend Stocks

3 No-Brainer Stocks to Buy Under $30

These three stocks all offer a huge deal for investors looking for dividends, as well as growth that will last.

Read more »

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Passive Income: 2 Safe Dividend Stocks to Own for the Next 10 Years

Dividend stocks such as Manulife and Fortis can help you generate a stable and recurring passive-income stream.

Read more »